Why Do Companies Outsource? Here Are 6 Key Reasons

Australian businesses owners are struggling more than ever to achieve their business goals and more often than not, will take on the burden themselves. Finding help while maintaining process optimization and cash flow has seen specialist outsource service providers enter the Small to Midsize market. Indeed, business growth is not a walk in the park; that’s why many are turning to outsourcing.

Outsourcing has been the most sensible solution to numerous business problems, time and time again. However, not all reasons to outsource are necessarily problems; at times, business owners simply need resources to focus on their core business. Whatever these reasons may be, we listed below the most common reasons why companies are turning to outsourcing, and in particular, outsourcing offshore.

  1. Base line cost savings

    Cost saving is the primary reason most companies outsource and for good reason. With the market getting more and more competitive every day, businesses are looking for ways to cut operating costs and increase their value margin. One primary way to do that is to outsource and/or replace an expensive existing role. With the development of technology and the globalization of business practice, there are now multiple regions across the world that provide highly skilled talent at a fraction of the cost compared to Australia; combine this with the ease of access and you can see why outsourcing is forming a key part business strategy moving forward.

  2. Try out something new at the lowest possible cost

    Outsourcing enables business owners to experiment with new strategies without the high risk costs associated with in-house programs. Areas such as sales, service or even a new product release can now be facilitated without the rising costs of resources or infrastructure.

  3. Freeing time and focus on more value-add functions

    Money is not the only resource that is freed up when outsourcing; so, does time and focus! When non-core functions of the business e.g. payroll, finance and accounting, lead generation, back office, etc. are being completed by someone working for your business through outsourcing, the business’ key resources are maximized. Business owners can use their time effectively and focus on building and developing partnerships, increasing sales, and innovating service offerings while providing the best customer experience possible.

  4. Tap into a global pool of talent/experts

    It is a known fact that Australia continues to struggle with skill shortages, thus no surprise  businesses are outsourcing and offshoring more of their functions to places such as the Philippines, India, and Vietnam. Through scale of economy in these regions (e.g. Philippines population > 100M), outsourcing has opened a greater talent pool of educated and experienced staff readily available within short time frames. Find out why the Philippines and outsourcing works.

  5. Drive efficiency, flexibility, and higher performance

    Outsource service providers should be experts in process, quality, and delivery. The right outsourcing partner should help you map out business processes and analyse what sort of outsource model suits best, ensuring the customer is at the center of the processes involved, while making sure flexibility is present, and high quality of performance is achieved.

  6. To better manage risk and continuity

    Most industries are not stable; change is always imminent. Companies therefore must adapt to these changes. Outsourcing helps mitigate the potential negative impact that may occur by ensuring core functions are still being performed and delivered, whilst management and internal resources can focus on remaining fluid and, if needed, adapting new business strategy. This security attracts companies into venturing into outsourcing.

Outsourcing has no plans of stopping, now more than ever there is a need to help businesses achieve growth and there are true global markets to satisfy.

Have more outsourcing questions? An expert is ready to listen.

Also read:

Outsource These 6 Tasks Today and Watch Your Business Grow

5 Questions About Outsourcing You Want to Ask

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